Growing demand for Facebook’s mobile app install ads helped push up average app marketing costs for developers in June by 13% per user, according to the latest monthly data from mobile app marketing firm Fiksu.
Fiksu attributed the rise in costs to the popularity of app install ads as a vehicle for promoting apps to the social network’s 800 million app users. Facebook executives last week indicated that revenue from the ad format was still a small part of overall ad sales but growing rapidly. In May, the company has said the ad unit had driven 25 million app downloads and that 40% of the top-grossing Android and iPhone apps had advertised on Facebook.
Fiksu, a company that helps automate mobile app advertising campaigns, tells Fast Company that Facebook app install ads have been so efficient that they cut its costs for acquiring a new user by 15% to 60% compared to other ad options.
In October, Facebook began leveraging the enormous popularity of its mobile apps to advertise other apps. The mobile ads for apps, which run in users' news feeds and direct them to app install pages appropriate for their devices, help mobile developers distinguish their products from the nearly 2 million apps in the Apple and Google Play app stores and help Facebook ramp up mobile revenue, which at the time of their launch was non-existent. According to the latest numbers, the setup is working out swimmingly for the social network and its advertisers.
Mobile app advertising outfit Fiksu told Fast Company mobile app install ads have helped it lower its costs for acquiring new users by 15 percent to 60 percent.
Facebook Chief Operating Officer Sheryl Sandberg said during the social network’s second-quarter earnings call last week that revenue from mobile application install ads continued to grow, and Product Manager Deborah Liu elaborated on that in an interview with Fast Company.
Successfully marketing your app requires much more than strategic media buying, compelling creative units, and catchy social media tactics. High performance mobile app marketers have a laser-like focus on targeting, acquiring and retaining loyal users—those who take a specific desired action, such as an in-app purchase.
With more than half of the adult U.S. population using smartphones and 900,000 apps in the Apple App Store, it's no wonder that mobile app publishers and other brands are hopping on the mobile advertising bandwagon to get their brands out in front of the skyrocketing number of mobile users.
Originally posted on Direct Marketing News, written by Craig Palli, chief strategy officer of Fiksu.
“Our clients are seeing high volumes of users at extremely competitive cost per install, and as a result we’ve increased our spend on Facebook over 500% in the last two months,” Craig Palli, chief strategy officer for mobile app marketing firm Fiksu, said in an email.
Facebook has been particularly successful with so-called app install ads, which make it easy for app developers to promote their apps for quick installation on mobile phones. These ads appear directly in users’ news feeds, making them hard to avoid but potentially more appealing because they’re in the natural flow of what users are doing on Facebook on their phones.
No wonder the likes of Fiksu and other app boosters spent a lot of money on Facebook mobile ads. Cost per click increased despite a lot more clicks and ads shown.
There is still a monetization gap in comparison to the share of their mobile audience, but that’s definitely impressive for a new product.
There are a couple of reasons for this sharp increase. Time spent on Facebook is meaningful. Facebook’s mobile ads integrate well in the natural flow of Facebook’s news feeds. They are quite visible and are increasingly successful at driving mobile app installs. According to our European Technographics Consumer Technology Online Survey, Q4 2012, 16% of online adult smartphone owners (ages 16-plus) who use apps report that they first learned about an app via social networking websites such as Facebook.
Craig Palli, chief strategy officer for Fiksu, said the company was surprised by how quickly Facebook grew its mobile ad dollars.
Facebook raked in $1.6 billion in ad revenues during Q2 2013, with mobile ads representing approximately 41 percent (or $66 million) of that haul, according to a report issued by the social media monolith yesterday. The site’s percentage of revenue from mobile represented approximately 30% of its ad revenue in Q1 2013.
One of the biggest areas of success in mobile has been app install ads, which promote the download of mobile applications. “We expected an increase, but an 11 percent increase in mobile share of ad revenues in a single quarter is an astounding surge, and that's for a company that just eight months ago some were saying had missed the boat on mobile,” said Craig Palli, chief strategy officer of Fiksu, Boston.
While Facebook’s significant gains in mobile are propelling the social network to new heights, managing advertiser demand versus user tolerance for ads will be a challenge for the company going forward.
Those with a stake in the social-mobile space sounded thrilled with the results. Craig Palli, chief strategy officer at the mobile app firm Fiksu, said that he "expected an increase, but the [double-digit jump] in mobile share of ad revenues in a single quarter is an astounding surge."
Facebook's mobile ads accounted for 41 percent of its $1.62 billion in ad sales during the second quarter, during which the company reported $1.81 billion in total revenue, beating Wall Street expectations on Wednesday.
For comparison, mobile was 30 percent of its ad sales during the first quarter. Facebook's monthly active users on mobile skyrocketed to 819 million during Q2, a 51 percent increase year over year.
Glide currently has just $2 million in seed funding, and the cost to acquire a loyal app user has been anywhere from $1.29 to $1.50 over the past several months, according to mobile app marketing firm Fiksu.
Video chatting app Glide is on a roll of sorts. In recent weeks this mobile messenger for iPhone and Android devices has been climbing the app store charts on both platforms, having gotten as high as #6 overall in the Apple App Store, and #1 in the App Store’s social networking section. Today, the iPhone app is ranked #16 in the U.S., Glide’s top market – just one spot below Instagram, according to AppData’s leaderboards. But on the iPhone App Store on the phone, it has actually bumped Instagram from spot #15 in the U.S.